GameStop said Wednesday that sales fell in the third quarter of the fiscal year and the cash pile shrunk sharply as the brick-and-mortar retailer has worked to expand its digital presence.
In its third fiscal quarter, which ended Oct. 29, GameStop’s total revenue was approximately $1.2 billion, down from $1.3 billion in the same period last year. The company’s cash and cash equivalents fell from about $1.4 billion a year earlier to nearly $804 million.
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Shares of the company rose nearly 3% in after-hours trading on Wednesday, after falling 4.8% in the regular session.
GameStop has been working to become profitable and revamp its brick-and-mortar retail business after what executives have said were years of underinvestment. In recent months, the retailer has changed leadership and focused on initiatives to further anchor itself in the digital world.
GameStop CEO Matthew Furlong said during a phone call with investors on Wednesday that the company is “trying to achieve something unprecedented in the retail industry … trying to transform a legacy company that was once on the brink of bankruptcy.”
The company reported a net loss of nearly $95 million, a slight improvement from a loss of approximately $105 million in the same period last year.
Furlong added that the company has been working to strengthen its balance sheet and bolster its cash position, hoping to enable it to explore acquisitions of complementary companies. The CEO added that the company would continue to reduce costs, with layoffs in the second half of 2022.
GameStop’s results cannot be compared to estimates because there are too few analysts covering the company. As in previous quarters since the start of the pandemic, GameStop did not provide a financial outlook.
The retailer continued to hold a lot of inventory on its balance sheet: $1.13 billion at the end of the quarter, though slightly down from $1.14 billion at the same time last year. Like other retailers, GameStop has faced an inventory backlog after deliberately piling up goods to contend with higher customer demand and supply chain issues.
GameStop strengthened its inventory position earlier this year by divesting a small portion of its merchandise in weak demand categories, Furlong said Wednesday.
The company, which has become known as a meme stock, has adapted its business to a digital world. It attracted new leadership, including CEO Matt Furlong, a Amazon veteran, and Chewy founder and activist investor Ryan Cohen as chairman.
Still, the brick-and-mortar retailer has struggled to turn a profit in recent years, leading to cost cuts and a leadership shake-up. Earlier this year, it fired chief financial officer Mike Recupero and laid off employees.
The company also launched an NFT marketplace in July, which was open to the public for beta testing. The marketplace allows users to connect their own digital asset wallets, including the recently launched GameStop wallet, so they can buy, sell, and trade NFTs for virtual goods.
GameStop said in a press release Wednesday that sales driven by new and expanded brand relationships were “strong in the quarter, while sales in the collectibles category remained strong on a year-to-date basis.”
GameStop said last month it had ended its partnership with FTX after the crypto exchange filed for bankruptcy. Just months earlier, GameStop had announced the partnership with the aim of introducing its customers to the crypto world and market, and had also started selling FTX gift cards in some of its stores.
In a tweet, the company said it would issue full refunds to affected customers.
Furlong said on Wednesday that the company was “lucky that exposure to digital assets was very modest.” FTX’s bankruptcy filing has sent ripples through the crypto market. The CEO has not provided any updates on the recently ended partnership with FTX.
